on Thursday, December 13th, 2012 at 3:14pm.
The DC Homestead Deduction is a real estate tax benefit for District residents who own and occupy property. This deduction can save you hundreds each year by reducing your annual tax liability and providing a cap on the assessed value of your property.
There are a few criteria that must be met to qualify for the DC Homestead Deduction. First, you must occupy the property shortly after closing as your principal residence. In addition, the property must contain no more than five units, including yours. For example, if you own a condo complex with 200 units, the building would not qualify for the DC Homestead deduction. If you own a single family home or a smaller apartment building, then you would be eligible for the DC Homestead deduction.
So how does the DC Homestead Deduction actually work? There are two main benefits. The first one reduces your property’s assessed value by $67,500. So if the tax rate is $0.85 per $100, that's an annual tax savings of $573.75. The other benefit imposes a limit on the assessed value of your property. Specifically, your property assessment for tax purposes may not increase more than10% each year. That can be a huge savings if you live in an area where property values are quickly rising.
The DC Homestead Deduction is in effect for all subsequent tax years after approval. If you move, change ownership, or change your principal residence, you must file a cancellation form with the city since you no longer qualify for the deduction.
Sieze the opportunity for savings if you qualify! If you are eligible, there’s no reason not to apply for the DC Homestead Deduction.